Atty. Gerardo F.C. Villacarlos

January 15, 2004 SEC OPINION NO. 03-04 Atty. Gerardo F.C. Villacarlos Garcia Ines Villacarlos & Garcia Law Offices 205 Aguirre Ave., BF Homes Paraaque City Sir : This pertains to your letter dated 06 January 2003 requesting for opinion on the business operations of CENTER FOR HEALTHCARE PROFESSION, INC. ("CHP" for brevity). Records on file show that the primary purposes of said corporation, as approved by the Commission on 24 September 2002, are as follows: "a. To establish and operate an institution for healthcare training and education offering post-secondary higher education (non-degree courses), short-term courses, training and seminars (such as those for caregivers, nurses and other allied medical professions) in any and all healthcare professions b. To engage in services such as but not limited to the conduct of nursing and review classes for local and state board examinations, healthcare systems design and analysis, consultancy and other related activities, c. To extend, conduct and manage the use of its healthcare training and educational courses, programs and other services to all its branches and duly licensed training centers d. To perform such other acts necessary or incidental to the accomplishment of the foregoing business insofar as may be allowed by applicable laws and regulations (AS AMENDED ON FEBRUARY 28, 2002) You stated in your letter that herein subject corporation was required by the Regional Office of Technical Education and Skills Development Authority (TESDA) to amend its Articles of Incorporation, particularly the primary purpose, to reflect its intention to establish a CHP Branch in Dagupan City since its current Articles of Incorporation do not reflect the setting up of a branch office in Dagupan City. It is your view that said TESDA requirement is no longer necessary as it would be self-limiting and inconsistent with that the subject's amended primary purpose allowing the creation of branch offices. Hence, this request for opinion on whether CHP should be required to amend its Amended Articles on file to operate a branch office in Dagupan City. Please be informed that the registration of a corporation with the Commission only constitutes a grant by the government of the power to act as a corporation (juridical personality). Except as provided by existing laws, rules and regulations, the Commission does not require a corporation to amend its Articles of Incorporation for the latter to establish branch offices within the Philippines. EASIHa The Commission, has ruled that the power to create or establish branch offices is generally provided for in the articles of incorporation or in the by-laws. However, even in the absence of such a provision, the rule is that every corporation formed under the law has the implied or incidental power to establish branch offices in the Philippines or elsewhere as the needs and exigencies of the business of the corporation may require. Thus, the Board of Directors of a corporation may, in the absence of such a provision in its articles of incorporation or by-laws, establish branch office if it is necessary or convenient for the proper accomplishment of the purpose for which the corporation has been created. 1 Yet in some instances, the issuance of a secondary license or business permit from other government agencies is still necessary for a corporation to be able to engage in certain business activities, and in the issuance of such license or permit, the proper government agency is empowered to enforce necessary requirements prescribed by existing law, rules or regulations before the corporation is allowed to operate. In the instant case, it appears that TESDA has imposed certain requirements considering the paramount importance given to the interests of the investing public. In this connection, please refer to SEC Memorandum Circular No. 15, Series of 2003 which provides: "As a matter of policy, the Commission shall refrain from rendering opinion on the following: xxx xxx xxx 5.6. Requests which involve interpretation of administrative rules and issuances of other government agencies considering that it is the promulgating agencies which are competent to undertake such construction by reason of their knowledge of the specific intent and extent of application of the subject issuances;" Very truly yours, (SGD.) VERNETTE UMALI-PACO General Counsel Footnotes 1. SEC Opinion dated June 22, 1988 addressed to Elvira Ocampo-Adorable citing SEC Opinion dated March 2, 1970, addressed to Jalwindor Manufacturers Incorporated.